When choosing auto insurance, there are several options to consider as you try to create a policy that best suits your needs. Everyone knows that in almost every state, to drive a vehicle legally, you must have at least liability coverage on your car, but what about other types of insurance? Well, one of the most important options is your collision coverage.
If you finance a vehicle to buy or lease, your lender will insist that you have collision coverage, and the more the better. For example, in the state of New Mexico, if you were to lease a Cadillac, the leasing company would likely insist that you purchase the maximum collision coverage available. There are levels of collision coverage that you should be familiar with in order to make the right decision for your situation.
The least amount of collision offered would be called the “Limited” option. If you choose this option and are rear-ended by another car, which would be your fault, your limited policy would pay nothing. If you were rear-ended, making the other person at fault, you would pay your chosen deductible and then the insurance company would pay the rest. So if you’re more than 50 percent responsible for a collision and have limited collision coverage, you foot the bill.
The middle of the road collision option is called the “Standard” option. In this case, if you crash into another car or get hit from the side, you’ll be responsible for your chosen deductible, which ranges from $250 to as much as $1000. Basically, with the Standard option, what you pay is the same no matter whose be to blame for the accident. Some states offer a zero deductible option, but the premium rates would be considerably higher. The standard collision option is the most chosen by the average driver.
The highest and most expensive collision option is called the “Broad Term” option. In this case, if you are responsible for the collision, or at least more than 50% at fault, you will be responsible for your deductible and the insurance company will cover the rest. If you are No You are at fault for the collision and you have long-term collision coverage, you pay nothing. The insurance company would pay everything for you 100%.
Also keep in mind that the insurance company is only responsible for covering damages up to the value of the car. So if you really do get into a big collision and your car is crushed and it will cost more than its actual value to repair, it will be declared totaled, just for reflection.
So shop your auto insurance policy carefully, choose your options wisely, be a safe driver, and make sure you’re covered to the best of your budget.